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Millennials May Be Hard for Advisors to Reach

A recent investor survey has uncovered an intriguing generation gap regarding the Labor Department’s fiduciary regulation.

Focus groups were conducted to provide context to the quantitative findings of the Hearts & Wallets Money Movement study, which revealed the large latent potential of households who exhibit dissatisfaction with current providers, yet have not acted.

As part of that focus group, investors expressed four concerns about the fiduciary regulation and its potential impact:


  • Nothing of value is free

  • Limiting the other party’s incentive to help me may hurt me

  • The government can’t be trusted any more than private companies

  • Less competition hurts consumers


However, Hearts & Wallets found among Millennials – those in their twenties and early thirties – a perception that reduced competition, which some have seen as an outcome of the regulation, would be helpful for consumers.

A Different Experience

Hearts & Wallets Vice President Todd Hiller notes that Millennials’ experience has been shaped by different economic cycles vs. older generations. Older investors lived through the ‘90s and earlier times favorable to wealth creation, but that’s not been the case yet for Millennials. Moreover, many Millennials are starting off burdened with considerable student loan debt, another frequently mentioned pain point in Hearts & Wallets focus groups. “They have to get over that hurdle before turning to long-term investing goals,” he explained.

Many financial service providers have become excited about the eventual opportunity posed by the Millennials given the sheer size of the generation. However, in Hiller’s view, Millennials will pose considerable challenges. First are their perspectives and behaviors like low investing risk tolerance. Secondly, younger investors are under-represented in employer sponsored plans (a statistical finding from Hearts & Wallets quantitative Mindset study). As a result, providers will need to find other means to create awareness, initiate relationships and build their brands.

Third, Hearts & Wallets believes Millennials will require additional support between balancing short-term/long-term financial needs in response to debt servicing, greater employment participation in the Gig Economy, etc. They think that Millennials will have a tough time focusing on long-term investment needs when the economy presents income uncertainty and/or debt servicing crowds out retirement savings. Hiller says that the focus group respondents heard the long-term messaging from providers, and they understand it. The issue is they don’t necessarily believe it, nor is it top of mind, due to other concerns.

Other Perspectives

Focus group participants also reacted to proposed concepts on financial wellness, an invested emergency fund, and investments and insurance packaging. Overall, financial wellness approaches were well received by consumers, a primary focus of some robo-advisor entrants. The promotion of investment and insurance products together appealed to a majority of respondents, particularly when considering the future of the workplace.

The Hearts & Wallets research indicated that investors are looking to make a move; an estimated market of 47 million households with $15 trillion – in addition to the actively shopping segment of Americans considering money movement, which comprises an additional 26 million consumer households with $13 trillion. More than one in five households is actively considering moving money now. Job changes are an ideal time to capitalize on inertia opportunities, but most consumers (53%) do not want to leave money in a former employer plan, according to Hearts & Wallets quantitative Mindset study.

Looking ahead, Hearts & Wallets sees considerable challenges with the future generations of investors as a more independent-minded consumer, influenced by and now operating within a different dynamic. These factors were part of what motivated Hearts & Wallets to conduct the research.

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